Metal Traders Get Liquid: Platinum, Palladium Slump 3-4%

By Brendan Conway

Besides what you’ve already seenin silver and gold, it’s tough going in platinum and palladium Wednesday, too. The two metals are coming off recent highs pretty sharply with declines of 3% and 4%, respectively.

Here’s what Commerzbank’s commodity strategists had to say on the subject overnight:

Precious metals: Platinum has once again ricocheted off the $1,700 per troy ounce mark and this morning is trading at around $1,685. As reported by Anglo American Platinum (AGPPY), the world’s largest platinum producer, production at Siphumelele Mine has returned to normal after the latest riots. That does not mean at all that the underlying causes have been resolved, however. According to the European Automobile Manufacturers’ Association (ACEA), car sales in the EU fell by 8.7% year-on-year in January to 885.2 thousand units. This constituted the weakest start to a year since records began in 1990. Car sales on a full-year basis had already plummeted by 8.3% to 12.1 million units in 2012, putting them at their lowest level for 17 years. The weakness is attributable to the recession in the southern EU countries which, ultimately, has also spilled over into countries such as Germany and France. In the eurozone’s two biggest countries, sales in January plunged by 8.6% and 15.1% respectively. Research firm IHS Automotive estimates that car sales in the EU will also decline further this year. If so, this would be the sixth consecutive annual decrease. The trend observed in the EU is in stark contrast to the trend evident in China and the US: in China, January actually saw record monthly sales. The weak demand in Europe is also likely to mean fewer cars will be scrapped, however, as a result of which less recycled platinum will be available.

ETFS Physical Palladium Shares (PALL) is down 4% at $15.38 midsession and ETFS Physical Platinum Shares (PPLT) is off 2.7% at$161.53. ETFS Physical White Metal Basket Shares (WITE), a portfolio of more than half silver, with the rest devoted to platinum and palladium, is falling 2.8% at$50.34.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.